Reading of stock charts

How to use it for maximal profits

There is also possible to have profitable trading and investing based solely on technical analysis. My technical strategies are based only on these principles and are profitable !

First you have to setup your charts to be able to analyze them. I recommend to use some good stock analysis software which makes this task much easier.

Another important points you should consider are:

1. Use candlestick charts.

This type of chart is best type for technical analysis of stock charts. Candlesticks provide a lot of information about price action.






2. Do not use too much indicators on stock charts

"Keep it simple". It is very big truth you can hear from all good traders and investors. The simplest approach to reading of stock charts the better results of such analysis.

Example of simple stock chart



Example of complicated stock chart






3. Use more then one time frame

It is very important to analyze more then one time frame. Do not afraid to use also longer time frames like monthly or weekly time frame. These charts provide very important info about most important levels of support and resistance.

As one famous trader noted "most traders spent 99% of their time on lower time frames, yet 99% of big profits were made on the higher timeframes"

Here is example of chart setup in Amibroker for 3 different time frames.




Click onto chart to see it larger.







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